 The IVA proposal sets out what is being offered to your creditors and what they can expect to receive after the costs of the IVA have been deducted.
The IVA Proposal sets out what is being offered to your creditors and what they can expect to receive after the costs of the IVA have been deducted. The IVA proposal will include details of your income and expenditure, a list of your creditors and what you owe them, a statement of affairs and what you are looking to offer your creditors and over what time period.
Brief Idea of IVA
In theory it is envisaged that the Debtor drafts proposals for presentation to his creditors prior to instructing a Nominee, (who must be a Licensed Insolvency Practitioner), to review them before submission to court and then to the creditors.An Interim Order is an order made by court precluding creditors from taking any action against the Debtor whilst a meeting of creditors is called and held to decide whether the proposals are acceptable to them or not.
Following the granting of the Interim Order the Nominee will circulate to creditors the following information:-
- The Proposals
- A complete list of creditors
- The Nominee's comments on the debtor's proposals
- A schedule advising creditors of the requisite majority required to approve the IVA
- A Statement of Affairs this effectively being a list of the assets and liabilities of the Debtor
- A form of proxy for voting purposes
- Notice of the date and location of the meeting of creditors to vote on the proposals
- A guide to the fees charged by the Supervisor following approval of the IVA
However, the IVA company has been heavily scrutinised by both the media and large financial institutions, primarily for the way in which said firms are supposedly overselling the specific benefits associated to the procedure and also the way in which the procedure is publicly promoted. As a result, creditors are becoming reluctant to cohere to the terms of an IVA, with many just rejecting any alternative payment proposal outright.
Some Advantage of IVA:
- No restrictions as regards personal credit although in practice can prove difficult to obtain.
- Enables a Sole Trader or Partner to continue to trade and generate income towards repayment to creditors which would otherwise have a call upon the personal assets of the individual.
- The Debtor does not suffer the restrictions imposed by bankruptcy, such as not being able to act as a director of a limited company etc.
- The proposals are drawn up by the Debtor and are entirely flexible to accommodate personal circumstances. An example of this may be to exclude the Debtor's property from the IVA assuming the Debtor can adequately satisfy creditors that the outcome would be better for them by agreeing to this than could otherwise be expected if a bankruptcy order was made
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